An Introduction to Engro Foundation

June 2013

IFC Sustainability Exchange: Vocational Training

Improving Local Economies Through Skilled

Labor

• Introduction

• Engro Foundation: What We Do

• Vocational Training

• Dairy Value Chain

• Rice Value Chain

Contents

Engro Corporation has 3500 employees and revenue of Rs. 125 billion (2012) across the petro-chemical & dairy food industry…

Subsidiary Revenue Profit

After Tax

Fertilizer 30.9 -2.9

Food 40.9 2.6

Polymer 19.7 0.0

EXIMP 11.7 2.0 Powergen 20.9 -0.4

Total 125.2 1.3

Financial Performance – 2011 (Rs. Billion)

1957

1965

1978

1991

1997

1999

2005

2010

2010

2010

2011

2012

Pak Stanvac, a 50:50 Esso-Mobil JV discovers Mari Gas Field in Upper Sindh

Esso Pakistan Fertilizer Co. Ltd is incorporated

Esso becomes Exxon

Exxon divests & employees lead MBO to form Engro Chemical Pakistan

Engro sets up chemical storage facility and forms Engro Vopak Terminal

Engro the first PVC manufacturing facility and forms Engro Asahi Polymer

Engro diversifies into Dairy and forms Engro Foods

Engro Foundation becomes the vehicle for all social spend

Engro Chemical becomes a holding company and renamed Engro Corporation

Engro Powergen builds 226MW power plant out of permeate gas

Engro Fertilizers builds the largest urea train plant in the world

Engro Corporation passes Rs. 100 Billion mark in revenue

Our History

Other 2.4 1.5

Mission : EF is committed to the sustainability of our businesses by

investing in our communities around our plants and in our business value chains 1) Livelihood & Skill Development 2) Education 2) Health 4) Community Physical Infrastructure

Engro Foundation (EF) is Engro’s platform for all social investments annually spending Engro Corp’s 1% Profit Before Tax

A Collaborative Approach: Our approach is based on a principle of

business inclusiveness where we work with funding and implementing partners who complement our resources and expertise into our social projects (eg. social mobilization, skills development, agri value chain etc).

Education

•Primary Education

•Secondary Education

•Technical Education

•Around 3Km around our plants

Health

• Preventive & Curative Health

CPI

•Community & Physical Infrastructure

• Solar Lighting

• Sanitation

Livelihoods

• Dairy Livestock Program

• Vocational (3-12 month)

• Technical Diploma (3 Year)

Our Thematic Areas : CSR Spend Rs. 114Mn (2012)

Engro’s Inclusive Business Framework

Value

CSR as Value Creation

Innovative and promotes sustainable business model

Fundamental strategic and operational impact

• Shared value (business and communities) • Promotes competitiveness and innovation • Integrates business into the community • Develops Human Capital • Incorporated into the Business Strategy

CSR as Risk Management

Compliance Medium to high strategic and operational impact

• Mitigates operational impact • Mitigates operational risks • Supports external relationships

CSR as Corporate

Philanthropy

Providing funding and skills

Little strategic and operational impact

• Sponsorships • Short term benefits • Limited funds available • Diluted impact as budget allocated to many • Corporate competencies not fully utilized • Misalignment- business and social responsibility strategies /

functions • Results in minimal social and business impact

Purpose Impact Benefits

Engro Foundation– Footprint

Across Pakistan…

Vocational Training

8

• District Ghotki, Upper Sindh • Ghotki is located 1.5 hours North-East of Sukkur

• There is a population of about 1 million people spread over an area of 6975 sq km

• Although it is an industrial heartland of 14 major Oil & Gas Companies, over 80% of the population is rural

• At the heart of an industrial cluster • Ghotki is at the heart of an industrial cluster which

contains 14 of the largest Oil & Gas companies in Pakistan, including Fauji Fertilizer, Mari Gas, Fatima Fertilizer and Engro Fertilizer/Power

• A survey conducted by the industry showed a demand for 200 Trade Apprentices per year from the Oil & Gas Sector

Ghotki

Approx. Population 1 million

Youth Segment (15-30 years) 35%

Rural Population Over 80%

14 Oil & Gas companies within a 50-60 km radius

Ghotki, Upper Sindh : High Unemployment and Unskilled Labor

Ghotki Statistics Percentage Population

Estimated PoP Size

% population 15-30 years 34% 340,000

Men Unemployed % 35% 350,000

At-home Women % 94% 940,000

Teachers/schools Ratio 2.6

Private/Govt. Jobs 23% 34,500

Skilled Labour 3% 4500

Daily Wage Labour 57% 85,500

Agri-Livestock 10% 15,000

Business/SMEs 7% 10,500

Note: Based on Engro Foundation Fall 2011 Survey

The following characteristics provide a ground for VoTech:

– The largest demographic segment of society is youth between the age of 15-30 years old

– Unemployment rates are extremely high

– A large majority of the working population is involved in daily wage labor which can be upgraded to semi-skilled levels

Rationale was to develop technical skills that could be linked with the industry towards a sustainable model

– 3-12 month vocational training

– 3 year accredited technical diploma

Poor Social Indicators in Ghotki but connected to Industrial Cluster

Features Details

Location Dharki, District Ghotki, Sindh Pakistan

Partners Pakistan Industrial Development Corporation, Engro Corp., Mari Gas Corp. Ltd (MGCL), Descon Engineering (DESCON), Saipem of Italy (SAIPEM) partnered to form PCESSDC (Pakistan Chemical & Energy Sector Skilled Development Company)

Courses Offered 3 year diploma : Chemical & Mechanical Engineering. Instrumentation 2012, Electrical 2013 & Computer Science 2014. 60 students enrolled. Curriculum subjects aligned with market and industry needs of the area

Current Enrollment 135 students (expected to cross 300 by 2015/6)

Facilities Expected: Hostel, internet facility, laboratory & library

Curriculum Accredited by the Sindh Technical Board & Guild UK by end of the academic year

A Vocational Training Center was set up in 2011 in partnership

What is PCESSDC?

Pakistan Chemical & Energy Sector Skills Development Company (PCESSDC)

is a non profit, private public partnership company (registered under section

42 of 1984) established in 2009

PCESSDC TTC was set up by PIDC (Rs. 100m), Engro Corporation (Rs. 44m),

Mari Petroleum Company (Rs. 30m), DESCON (Rs. 5m), Saipem (€250,000 in

kind) and STEVTA (Rs. 25m) later on joined by USAID (100 M for Hostel

Construction) & DEG of Germany (EUR 200,000.00) for Mechanical Lab

PCESSDC TTC currently offers 3-year diplomas in Mechanical and Chemical

Engineering and as a joint venture with STEVTA 3 – 6 months short courses for

vocational training

Mandate

Its mandate is to promote, facilitate and provide education and training

to a young and growing rural population in various disciplines of the

Chemical and Energy sector in Pakistan

PCESSDC focuses on the provision of employment to the young and

expanding rural population of Pakistan.

It aims to invest in the productivity of the rural community by filling the

education gap and equipping graduates with the manufacturing and

technical skills required to build a strong industrial economy.

Some Glimpses